Ensco declines after missing earnings estimates; Northern Oil trades up on asset and acreage acquisition

By James McCandless

San Antonio, April 27 – The distressed debt market finished the week Friday with more activity than has been seen in recent weeks, according to traders, as earnings drive the overall market.

Ensco plc notes dipped after the company posted its Q1 report in which it missed earnings and revenue estimates.

Northern Oil and Gas, Inc. issues traded up after Thursday’s announcement that the company has agreed to purchase assets and acreage in the Williston Basin in North Dakota.

American Tire Distributors paper continued to slowly climb back from a double-digit decline experienced earlier this week after Goodyear announced it was cutting ties with the company.

Intelsat SA notes were mixed. Recently a subsidiary was made a part of a government project. Frontier Communications Corp. issues traded up as the company continues to search for buyers for certain assets. FirstEnergy Solutions Corp. paper was mixed after Wednesday’s announcement that the company would deactivate three at-risk plants unless the government provided aid.

Ensco posts numbers

Britain-based oil driller Ensco saw notes decline after the company posted its Q1 report that disappointed analysts, a trader said. The company reported a loss of 25 cents per share of common stock and revenue was $417 million while analysts expected a 25 cents per share loss and $433 million in revenue, respectively.

“They have an issue with expenses,” a trader said. “They need to bring costs down or more people will lose confidence.”

The 5¾% bonds due 2044 shaved off ½ point to close at 69½ bid.

Northern Oil gains

Elsewhere in the energy sector, Minnetonka, Minn.-based independent oil producer Northern Oil and Gas issues regained Thursday’s losses, market sources confirmed, after the company announced that it had entered into an agreement with Salt Creek Oil and Gas, LLC to purchase assets and acreage in the Williston Basin in North Dakota.

$40 million in cash and 6 million shares of common stock will finance the deal, which is expected to finalize within 40 days and have an effective date of Jan. 1, 2018.

The 8% notes due 2020 gained about 1½ points to close at 94¾ bid.

The 8% notes lost about 1¼ points on Thursday.

American Tire up

Huntersville, N.C.-based tire distributor American Tire gained again Friday, traders confirmed, after massive losses earlier in the week on Tuesday’s news that Goodyear had ended its distribution agreement with the company after entering into a joint distribution venture with Bridgestone late last week.

The 10¼% paper due 2022 rose about 2 points to close at around 55½ bid.

The 10¼% paper jumped up 11 points on Thursday.

Volume names trade

Luxembourg-based satellite communications company Intelsat notes were mixed to end the week. Recently, a subsidiary of the company was chosen to participate in a satellite payload project for the Federal Aviation Administration.

The Intelsat Jackson SA 5½% notes due 2023 fell ¼ point to close at 84 bid. The 7¼% notes due 2020 gained about ¼ point to close at 97¾ bid.

Norwalk, Conn.-based wireline telecom name Frontier Communications issues gained as the company continues the search for potential buyers for certain assets.

The 7 5/8% notes due 2024 edged up ¼ point to close at 65¾ bid. The 10½% notes due 2022 gained about ½ point to close at around 88½ bid. The 11% notes due 2025 rose about ¼ point to close at around 77½ bid.

FirstEnergy Solutions, a subsidiary of Akron, Ohio-based electricity producer FirstEnergy Corp., saw its paper mixed as the company waits for the government to decide if it will guarantee profitability to three at-risk power plants that the company will deactivate otherwise.

The 6.05% paper due 2021 gained about 1 point to close at around 47 bid. The 6.8% bonds due 2039 lost about 1½ points to close at around 47 bid. The 6.85% bonds due 2034 fell ½ point to close at 47 bid.

“We had a little more activity than expected today,” a trader said. “But nothing major really dragged the market one way or another this week. We’re heading out of earnings season so we may see another slow week come Monday.”

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.